Over the weekend, the “public option” seems to have fallen out of favor with President Obama, who no longer sees the government-run insurance program as an “essential element” of health reform.

The administration continues to affirm its belief in “competition with the private sector” as a key element of health care reform:

In her interview Sunday on CNN, [Kathleen Sebelius] was asked if it was time to come up with an alternative to the public option. She replied that the president’s main concern was to promote competition with the private sector.

Robert Gibbs, the president’s press secretary, stressed that, “what we have to have is choice and competition in the insurance market.”

Increased choice and competition would certainly be welcome in health care. As the Department of Health and Human Services helpfully points out, 63 percent of Michigan’s insurance market is dominated by one insurer: Blue Cross Blue Shield of Michigan — the very company that currently receives government backing and “competes” with the private sector in Michigan by acting as the state’s insurer of last resort.

Michiganders concerned about choice in insurance, then, shouldn’t be comforted by speculation that the government-run insurance agency will be replaced by government-backed private co-ops as proposals for health care reform evolve. These co-ops would enjoy many of the advantages that already allow BCBS to dominate Michigan’s insurance market, perhaps crowding out more private insurers and further restricting choice.

Those concerned about increasing choice and lowering the cost of health insurance in Michigan should be pushing state and federal legislators to allow for the purchase of insurance across state lines, ending the protection of big insurers by government and putting the insurance market back in the hands of consumers.

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